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A highly risk-averse investor is considering adding one additional stock to a 3-stock portfolio, to form a 4-stock portfolio. The three stocks currently held all have b = 1.0, and they are perfectly positively correlated with the market. Potential new Stocks A and B both have expected returns of 15%, are in equilibrium, and are equally correlated with the market, with r = 0.75. However, Stock A's standard deviation of returns is 12% versus 8% for Stock B. Which stock should this investor add to his or her portfolio, or does the choice not matter?
Either A or B, i.e., the investor should be indifferent between the two.
Stock A.Stock B.Neither A nor B, as neither has a return sufficient to compensate for risk.Add A, since its beta must be lower
Magic City Steel Enterprises has current assets of $160,000, total assets of $200,000, current liabilities of $85,000, and total liabilities of $100,000.
A $1,000 corporate bond with 10 years to maturity pays a coupon of 8% (semi-annual) and the market required rate of return is a) 7.2% and b) 10%. What is the current selling price for a) and b)?
A U.S. corporation has purchased currency call options to hedge a 70,000 pound payable. The premium is $.02 and the exercise price of the option is $.50. If the spot rate at the time of maturity is $.65, what is the total amount paid by the corporati..
Describe three of the main ways that the euro affects the members of the EMU.
Please describe why the time value of money is significant in an economic decision and how NPV and payback period are used in business to incorporate the time value of money into operational decision.
Define preferred stock and explain why is preferred stock considered a hybrid security determine when should a company fund with preferred stock instead of common stock or debt.
A 5 year par value bond ($1,000) has an annual coupon rate of 8%. What is the modified duration of the bond? Use duration table (Note: discount rate is 8%)
The current price of a 10-year, $1,000 par value bond is $1,000. Interest on this bond is paid every six months, and the simple annual yield is 14 percent. Given these facts, what is the annual coupon rate on this bond?
Please critique the following article with the literature review, methodology and state key findings.
McDonald's and Burger King are situated on different corners of a downtown intersection. Burger King and McDonald's compete on the basis of the values they set for their burger, fry, and soda mixture meals.
The tax rate of Churchill is 30%. How many shares of stock should the company sell, and buy back bonds from the proceeds, to attain its optimal capital structure?
Go to this GSA website and pick one of the GSA acquisition or procurement programs that interests you most and summarize it.
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